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Estimating the Impact of a Hospital Merger Using the Difference-in-Differences of Prices

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  • Gautam Gowrisankaran

Abstract

This paper comments on "The Price Effects of Hospital Mergers: A Case Study of Sutter-Summit Transaction" by Steven Tenn. I exposit a simple model of differentiated products competition and consider the implications of Tenn's findings in the context of this model. I find that Tenn provides compelling evidence that the merger led to a price increase at Summit Hospital. The causes of the price increase and the welfare implications of the merger are less clear, particularly since anecdotal evidence suggests that quality increased at Summit Hospital post-merger. A difference-in-differences analysis using quality and quantity data can shed more light on the consequences of the merger.

Suggested Citation

  • Gautam Gowrisankaran, 2011. "Estimating the Impact of a Hospital Merger Using the Difference-in-Differences of Prices," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 18(1), pages 83-89.
    • Handle: RePEc:taf:ijecbs:v:18:y:2011:i:1:p:83-89
    DOI: 10.1080/13571516.2011.542957
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    Cited by:

    1. Martin Gaynor & Kate Ho & Robert J. Town, 2015. "The Industrial Organization of Health-Care Markets," Journal of Economic Literature, American Economic Association, vol. 53(2), pages 235-284, June.
    2. R. Forrest McCluer & Martha A. Starr, 2013. "Using Difference in Differences to Estimate Damages in Healthcare Antitrust: A Case Study of Marshfield Clinic," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(3), pages 447-469, November.
    3. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.

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